Is the new Bank of America-Countrywide loan modification program real?
Author: Rob K. Blake | Date: October 17, 2008 | Filed In: Foreclosure Answers
Here’s the question…
“I have 2 mortgages right now. The first is a fixed 30 year loan for $442,500 @ 6.5% ($2754/Mo.) with Countrywide, and the second which is killing me is $132,500.00 @12% ($1466/Mo.) with HSBC - figures are pretty close I believe.
I know Countrywide as of today is helping people with mortgages that are behind, and offering to reset to the value of the home.
My question is, Is this real? If it is, could I get HSBC to do the same? Would Countrywide be able to take over the HSBC part, or should I try and just get away from Countrywide all together?
My wife and I have had job issues the past couple years and have been barely hanging on, but are doing much better. Our credit has suffered and we’re wondering if they would even entertain helping us at this point. Any information would be greatly appreciated.”
My answer:
Bank of America announced earlier this month their new loan modification program which came out of a settlement from many State Attorney Generals who sued Countrywide Home Loans for predatory lending practices. Since BofA bought Countrywide Home Loans back in July of this year, it’s now become their problem.
Here’s some interesting quotes from the press release,
“We are confident that together with the Attorneys General we have developed a comprehensive program that provides more solutions than ever before to assist troubled borrowers and put them back on the path to sustained home ownership,” said Barbara Desoer, president, Bank of America Mortgage, Home Equity and Insurance Services. “Since acquiring Countrywide in July, we have committed significant resources and developed innovative programs to help as many Countrywide customers as possible stay in their homes.”
The release outlines those eligible as…
“Various options will be considered for eligible customers to ensure modifications are affordable and sustainable. First-year payments of principal, interest, taxes and insurance will be targeted to equate to 34 percent of the borrower’s income. Modified loans feature limited step-rate interest rate adjustments to ensure annual principal and interest payments increase at levels with minimal risk of payment shock and redefault. Modification options include, among others:
– FHA refinancing under the HOPE for Homeowners Program;
– Interest rate reductions, which may be granted automatically through streamlined processing; and
– Principal reductions on Pay Option adjustable rate mortgages that restore lost equity for certain borrowers.
The program applies to eligible mortgage loan customers serviced by Countrywide and who occupy the home as their primary residence. Under the national program, Countrywide will not charge eligible borrowers loan modification fees, and Countrywide will waive prepayment penalties for subprime and pay option ARM loans that it or its affiliates own. Some loan modifications will be subject to compliance with servicing contracts and some will require investor approval.”
My thoughts are these..
1. When companies are forced to act “responsible” via lawsuits…they do it kicking and screaming.
2. FHA Hope Now is a joke.
3. Even if these programs could help you…and you could get them to act…your HSBC second poses a roadblock to any solution that requires a refinance instead of a loan modification.
With that said, you should contact BofA/Countrywide on the December 1 launch date and see what’s needed if you qualify…and get that process started. Possibly a simple reduction in balance or rate and payment adjustment would help out and that’s nothing HBSC can stop. Hopefully you can get that…without attempting any refinance. Refinancing is where HSBC can cause problems since you probably don’t have enough equity to pay them off even if you got a significant principal reduction from BofA.
Only time will tell if BofA is serious about helping homeowners stay in their homes or if they are simply going to put on a show and do the minimum required to comply with the settlement.
Thanks for the question,
Good Luck!
UPDATE 10/23/2008:It is now being reported a lawyer from the firm, Grais Ellsworth LLP published a letter informing the investors in Countrywide/Bank of America’s mortgaged-backed securities, of the lawsuit they could persue if any of these loans were allowed to be modified. The legal issues to me are not all that relevant, but the idea consumers need to know is…even if lenders wanted to modifiy loans and keep folks in their homes…they can’t without exposing themselves to investor lawsuits.
Author: Rob K. Blake
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Have you had any people dealing with Carrington who took over New Century?? I still want to know what person I should talk to about where $15000. went. I am getting the run around. They told me that If I make the $495 Payment it will go to loan modification. To me the left hand does not know what the right hand is doing. They say I owe $58,000. and past due $11,000. Very mixed up.
Ann
Ann,
Check out the post, Carrington Mortgage Services Review
You’ll see what I think of them….and you can click the link to all the complaints and read about others experiences with them too.
I just spoke with Countrywide this week. I have been trying to get them to modify our loan into the Hope For Homeowners program. Chris McGowen, my rep at Countrywide, tolm me they are not doing the H4H program. And she told my ARM at 6.78% was a good loan still. She said there is nothing wrong with ARM’s. She also stated, “No one knows what the future holds!” Wow, I fell off the couch. Does she know whats happening in the real estate markets and peoples lives right now? So they told me NO. So hey, ok, my home is worth $290,000.00. I owe $450,000.00. I think I will let Countrywide figure out my next move. I give up. I have been fighting them for a year to get this loan fixed into a 30 year term at 5%. They wont budge. No matter what they say they are doing for people. ITS A LIE!!!!!
I spoke with Bank of American yesterday and was told I qualify for the loan modification. I was told to pay 994.36 for November and I won’t have to make another payment until April 2009 at which point my payments will be 900.00. This helps me tremendously. Maybe you should try someone else.
We were accepted after we dismissed our banruptcy. We have paid all our payments infact they were paid 15,000 during the 1 year bankruptcy. I have paid 2 payments so far and they are supposed to be doing a modification. They are giving me the runaround. I was told they were going to do the modification in 30 days from the first payment and now they said from the Nov. Payment. I am so mixed up and they seem to not know what they are doing. It is Carrington. I keep getting letters and emails from local people that want my house. I want to stay it is my home.
Rick,
Sorry to hear it. Read everything on the post…
Carrington Mortgage Services Review…especially the comment section.
Maybe you can find something of value…
Countrywide will not budge unless you are 5 months behind on your payments or more.. they will scare you into making a payment which will void any chances you may have at a modification. They will only modify loans in serious default about to be foreclosed upon. We have been at it with them for almost 3 years .. we give up … and now they are attempting to help
Tom,
I hate to say it…but better late than never…eh?
Winning a loan mod is all about perseverance and patience.
Got a call Thrusday. They gave us our Loan Modification at 6% and our payments went up just a little. They sent a Notary to sign. Thank God that is over I thought they would never do a modification. She told me 3 weeks ago it would be at 9.5 % and now 6%. I hope everyone can get this happen to them.
Rick
Rick,
Great job! Is there anything else you can share with the group on “how” you did it. Needless to say, others are having a lot of difficulty.
Thanks…
How did it help your situation if the payment went up? Did they reduce your principal?
Thomas,
In this case, the payment would have been much more if the original note adjustment was left unmodified at 9.5%….
It is a fixed rate and anything owed was added went to the end of the loan.
$72K is alot bettter at 6%. I could not find an apartment for $572 a month.
We lost our son 4 years ago and my husband had just started a new job and could barely work. Then they fired everyone in the company and we had to file bankrupcy. We got out of bankrupcy and they were willing to work with us but it is patience. I do not reccomend bankruptcy all you pay is the attorney and the trustee. I even got a car. They did not want my house they wanted to see if we were going to pay the forebearance and then they called and the modification was done.
We dismissed our Bankruptcy. I immediately contacted Carrington and told the Bankruptcy dept. The told me to go the the Modification dept. I talked to a lady named LaGina.
We made a deal for forebearance and I paid them $600.
I give them a hardship letter, Tax return, check stubs etc. We made a deal for forebearance and I had to pay my original payments for 2 months and then I was told that the interest would be the same 9.5. I got a call from Gina not LaGina. She told me the terms of the modification and it would be at 6% and my payments were 572. I could not believe it I knew it was going to be over a 1000. They originally told me it would take 30 days and I guess they saw that I was paying on time they would do it. Also they
made our loan up to date. That is the best Christmas presant. They had a notary come over today and we signed.
I don’t know if it was luck or they are trying to help people.
I know the interest rates have gone down. I hope anyone having problems may start with a forebearance and then modification. It is alot easier than a refinance.
Rick
Rick,
Thanks for filling in the blanks…great job!
Im not sure I understand … These people are happy to be getting into a 6% loan when the rates are around 4%.. How exactly does the 6% help them ?
Thomas,
If the original adjustable rate note called for the rate to be 10% when it adjusted a month ago….getting them to modify the loan down to 6% is a huge benefit. Many of the Alt A or Subprime loans would have that kind of rate if were not for the loan modification. Plus you must remember, most of the borrowers who NEED a loan modification to stay in their homes, are in fact, non-prime borrowers…they have the Alt A, Subprime, No Doc, Option ARM, NINA or other non-prime mortgage product.
ah .. now i see… we were gien a 3 tiered loan … 3 dif payments to make … we were not explained as to how they worked or what they were… We were making the minumum payment only to have our loan of 185k jump to 270k in 2 years … we feel so screwed … we thought we were paying interest only and that the principal was staying the same … so naow we are waiting for countrywide …
Thomas,
Sounds like you have one of those Option ARMs…one that had the negative amortization if you made the “minimum payment” option.
Option ARMs as a rule reset in 5 years…so at reset the loan goes adjustable…no more payment “options”. Any neg am gets added to the loan and the full amount is now used to calculate the new payment…and that causes a serious jump in payment over the minimum so many borrowers go used to paying…triggering a foreclosure for most.
If you are going to negotiate a loan mod, you’ll have special considerations you should be aware of to be successful…
Get a copy of our ebook…and be ready before you call.
Good Luck!